Stock index price action key to reading Friday's narrow range

Price action and setup analysis

If the rally couldn’t extend when sellers weren’t stepping in front of the weekend… then can it be expected to extend with a whole week ahead on Monday?

Pattern points… (Setups and technicals)

How narrow was Friday’s session? Simply calling it an inside day hardly does it justice, since it developed not only entirely within Thursday’s range, but entirely within Thursday afternoon’s range. The 6-1/2 point range stopped short of touching either of the morning or afternoon bias signals. It left no unfinished business behind.

Actually, it was nearly an 8-point range, thanks to a last-minute surge up to 1416.75. But that stopped short of touching Friday’s pre-open probe up to 1419.50 and was retraced down to 1412.00.

Still, even before the last-minute fireworks, there had been no actual trending before the afternoon’s bias environment had lapsed at 2:30. This was in a rally that would be difficult to reverse down, it being a Friday. Sellers posed no serious threat, the weekend’s illiquidity was fast-approaching, but the rally could not extend higher.

This could be a problem, unless the rally were to extend higher without delay Monday — and maintain the rally through the open.

What’s Next… (Outlook and opportunities)

Don’t forget the weekly Saturday Strategy Session that begins at 9:30am ET. Its link can be found in the blog’s sidebar.

Look for at least one update overnight or ahead of the Morning Market Tour… My thoughts on the day’s econ calendar are linked here.

About the Author

Rod David develops analytical techniques that are designed to efficiently identify targets and turning points for any liquid stock or market in any time frame. He primarily analyzes S&Ps, generating several round-turn candidates daily. Rod publishes "Trading Plan" and more each session at the blog http://IfThenSignals.com.